This is a guest post by David M. Walker.
There has been a significant amount of attention recently on the alleged amount of fraud in federal programs. This attention has increased given the recent revelations relating to Minnesota.
While there should be zero tolerance for fraud, waste, abuse, and mismanagement, it will never be zero. It is also higher in government than the private sector for a variety of reasons. However, with annual recurring deficits approaching $2 trillion and rising over time, significant budget, spending, and tax reforms will be needed to avoid an eventual debt crisis.
Combatting fraud in government is a shared responsibility of a variety of parties. The primary responsibility lies with executive branch leadership and management. However, Congress and the accountability community can also help to minimize it. Congress can help to reduce the related risk when it passes legislation relating to federal programs, especially federal welfare, assistance and grant programs, provides funding for related anti-fraud efforts, and through its ongoing oversight efforts. In addition, internal whistleblowers and the public can provide valuable information.
The accountability (“Watchdog”) community has a role too. It includes the Government Accountability Office (GAO), Inspectors General (IGs), and state and local audit organizations. IGs are supposed to be on the front line for fighting fraud, waste, abuse, and mismanagement in federal programs within their jurisdiction. They are in the Executive Branch but also report semi-annually to the Congress. State and local level audit efforts relating to federal programs should complement the efforts of Inspectors General.
GAO, which is in the Legislative Branch, focuses on more strategic, systemic, and cross-cutting issues that go far beyond combatting fraud. Most of GAO’s efforts are designed to improve performance and assure accountability with an emphasis on economy, efficiency, effectiveness, and sustainability.
Beginning in 1990, the GAO began issuing its biennial High-Risk List. This list includes federal programs and activities that are at higher risk of fraud, waste, abuse, and mismanagement, or not effectively achieving their mission.
Beginning in Fiscal Year 2012, GAO started issuing an estimate of annual federal spending that relates to fragmentation, overlap, and duplication. This was a result of legislation championed by the late Senator Tom Coburn (R/OK). Senator Coburn was a champion for promoting fiscal sanity and sound management in the federal government. Importantly, these annual estimates relate more to the potential for improving economy and efficiency rather than combatting fraud.
GAO achieves significant financial benefits each year for the Congress and the American people, in many years returning over $100 for every dollar invested in the agency, a level of achievement that began during my tenure. GAO’s biennial High-Risk List, combined with the annual fragmentation, overlap and duplication report are the source for a very high percentage of its annual financial benefits.
Starting in Fiscal Year 2004, federal agencies were required to estimate annual improper payments within their respective department or agency. GAO had been doing so as part of its annual audit starting in Fiscal 1997. Most improper payments are due to processing errors and/or paperwork issues rather than fraud. Therefore, fraud is a sub-set of the overall estimate. Importantly, fraud requires demonstration of intent to prevail in court.
Improper payments began to increase markedly in 2011 and increased dramatically during the period that COVID pandemic aid programs were in effect. I have previously stated that I would not be surprised if fraud, waste, and abuse amounted to $1 trillion in connection with pandemic era programs for the total period they were in effect.
Why is there so much waste and fraud in the federal government and what can be done to reduce it? First, some federal programs authorized by Congress are not designed well. For example, they should not allow for self-certification of eligibility. Second, Congress needs to provide adequate funding for anti-waste and fraud activities, and exercise much more aggressive oversight in connection with such activities. Typically, Congress is not as aggressive in conducting oversight when one party controls the Presidency, the Senate, and the House. This is inappropriate given Congress’s Constitutional role, and its duty of loyalty to the country versus a party or person. Third, federal internal controls must be strengthened, and federal information systems need to be modernized. The federal government has a huge number of outdated and non-integrated information systems and does not make adequate use of AI. Fourth, the accountability community needs to learn from DOGE and utilize AI to conduct more timely auditing designed to identify potential fraud, waste, abuse, and mismanagement.
Finally, GAO and many IG offices are currently operating without Senate-confirmed leaders. Congress and the President need to make filling these positions a top priority. The next Comptroller General and all IGs must be highly qualified professionals with the courage, independence, integrity, creativity, and bipartisan credibility to lead their respective organizations to be effective for the Congress and the American people.
David M. Walker is former Comptroller General of the United States (1998-2008).